Netgear Inc. (NTGR)
Q1 2009 Earnings Call
April 22, 2009 5:00 pm ET
Joseph Vitalta – Investor Relations, The Ruth Group
Patrick Lo – Chairman, Chief Executive Officer
Christine Gorjanc – Chief Financial Officer.
Samuel Wilson – JMP Securities
Maynard Um – UBS
Hamed Khorsand – BWS Financial
Jeff Kvaal – Barclays Capital
Tom Lee – Goldman Sachs
Jonathan Goldberg – Deutsche Bank Securities
Previous Statements by NTGR
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Good afternoon and welcome to Netgear's first quarter 2009 results call. Joining us from the company are Mr. Patrick Lo, Chairman and CEO and Mrs. Christine Gorjanc, CFO. The format of the call will be a brief business review by Patrick, followed by Christine providing details on the financials. We'll then have time for any questions.
If you have not yet received a copy of today's earning release, please call the Roots Group at 646-536-7026 or your can go to Netgear's web site at www.netgear.com.
Before we begin the formal remarks, the company's attorney's advise us that today's conference call contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words anticipate, expect, believe, will, may, should, estimate, project, outlook, forecast or other similar words to identify such forward-looking statements. However the absence of these words do not mean the statements are not forward-looking.
Forward-looking statements represent Netgear Inc's expectations and belief concerning future events based on information available at the time such statements were made and include statements among other regarding Netgear's expected revenue, earnings, growth and operating income and tax rate on both a GAAP and non-GAAP basis, the effect of the global economic environment on the company's business, the possibility that Netgear may repurchase its shares under the repurchase program, our position in the market relative to our competition, the long term future of Netgear's business, our competitive position in the SMB, our ability to innovate anticipate new product offerings, current and future demand for the company's existing and anticipated new products, willingness of the consumers to purchase and use any of the company's products and an ability to increase distribution and market share for the company's products domestically and world wide.
These statements are based on management's current expectations and subject to certain risks and uncertainties including without limitation, the following: future demand for the company's products may be lower than anticipated, consumers may choose not to adopt the company's new product offering or adapt competing products, product performance may be adversely affected by real world operating conditions, the company may be unsuccessful or experience delays in manufacturing and distributing new and existing products, telecommunication service providers may choose to slow their deployment of the company's products or utilize competing products, the company may be unable to fully collect receivables as they become due, the company may fail to manage costs including the cost of developing a new product, and manufacturing and distribution of existing offerings, channel inventory information reported is estimated based on the average number of weeks of inventory on hand on the last Saturday of the quarter, as reported by certain of Netgear's customers, changes in the level of Netgear's cash resources and the company's planned usage of such resources, changes in the company's stock price, development in the business that could increase the company's cash needs and fluctuations in foreign exchange rates.
Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and the results may differ materially from what is expressed or forecast in such forward-looking statements. Further information on potential risk factors that could affect Netgear and its business are detailed in the company's periodic filings with the SEC including but not limited to those risks and uncertainties listed in the section entitled Part 1, Item A, risk factors, pages 11 through 26 in the company's annual report on Form 10-K for the fiscal year ended December 31, 2008 filed with the SEC on March 4, 2009.
Netgear undertakes no obligation to release publicly any revision to any forward-looking statements herein to reflect events or circumstances after the date hereof or due to the occurrence of unanticipated events. In addition, several non-GAAP financial measures will be mentioned on this call. Information relating to the corresponding GAAP measures and reconciliation of the non-GAAP and GAAP measures can be found in our press release in the IR site at www.netgear.com.
At this time I would like to turn the call over to Mr. Patrick Lo.
Thank you everyone for joining today's call. As expected, Q1 was a challenging quarter characterized by continued declines in market demand, destocking in the channels and a higher average exchange rate of the U.S. dollar compared to previous quarters.
In light of the economic slow down we achieved net revenue of $152 million, a decline from fourth quarter of last year, but above our initial guidance of $135 billion to $145 million. We announced on last quarter's call the implementation of a cost reduction initiative with the aim of reducing operating expenses by $10 million in 2009 as compared to the annualized fourth quarter 2008 run rate.
We have already seen significant cost saving result from our efforts, about $2.6 million in the first quarter of 2009 and we expect to meet our goal of $10 million savings by the end of the year.